Bodnar v. Bodnar

2012 BCSC 989 Bodnar v. Bodnar IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Bodnar v. Bodnar, 2012 BCSC 989 Date: 20120517 Docket: E32228 Registry: New Westminster Between: Kaari Lynn Bodnar Claimant And Scott Michael Bodnar Respondent Before: The Honourable Mr. Justice Schultes Oral Reasons for Judgment Counsel for the Claimant: W.A. McLachlan Counsel for the Respondent: R.L. Harris Place and Date of Hearing: New Westminster, B.C. April 19, 2012 Place and Date of Judgment: New Westminster, B.C. May 17, 2012 1. Overview [1] This is an application by Mr. Bodnar to vary a previous order in this family law matter. He seeks to reduce his child support payments to reflect what he submits has been a decline in his income. Consequent upon that reduction, he also seeks to reduce the arrears that have accumulated under the existing order and to be permitted to repay them at a rate of $300 per month. Ms. Bodnar opposes the application. 2. Evidence [2] The parties were married in 1996. They have two children together, aged 13 and 12. They were divorced pursuant to a consent order in July of 2010. Both were represented by their current counsel for that consent order. [3] Mr. Bodnar's income for child support purposes was stated in the order to be $120,000 per year which yielded a monthly child support payment of $1,696 per month. It is common ground that he made the required payments up to December of 2010 at which point he stopped payments on the post-dated cheques that he had previously provided. Since then he has paid about $4,000 towards his child support obligations. [4] Counsel differ slightly on the amount of his arrears, but in general at the time of the hearing of this application, they are somewhere in the range of $22,000 to $23,000. The Family Maintenance Enforcement Program is involved in attempting to collect these arrears. [5] Mr. Bodnar deposes that he could no longer afford to pay support in the ordered amount and that is the reason that he is in this situation. [6] He works in the construction industry. He is an equal shareholder in two companies -- Goldstar Holdings which has been a framing business, and WPC Homes Ltd. which as its name indicates, builds homes. He is an equal shareholder in these companies with a friend. [7] The home building business outgrew the framing business substantially over the years, he indicated. However, following a decline in the housing market, and also a decrease in the available profit due to the cost of buying building lots, his home building business has fallen off considerably and he has had to resort to doing piecework in framing jobs again, which are not particularly profitable. [8] He deposed that the last home he built and sold yielded a profit to the company of only about $45,000. [9] In order to cope with the housing construction slowdown he also started up a delivery business with his partner, under a contract with a building company, but this avenue of business did not prove viable and they sold the truck that they had purchased for it. Their profit was $50,000 over the original purchase price of the truck and this was used mainly to pay down company debt. [10] Mr. Bodnar's income on his tax returns for 2009 and 2010, which would have been the most relevant periods for the purposes of the consent order, showed his income as $62,500, derived entirely from dividends. His share of the pre-tax income for both of his companies was a negative number for 2009 and 2010. [11] His tax return income for 2011 was $22,520. In 2011, according to the recent financial statements, the home building business was still in a loss situation as far as his share of the pre-tax income, but his framing business yielded a share of pre-tax income in the range of $40,000. [12] As of January of this year, when he swore his first affidavit in the application, Mr. Bodnar deposed that he had earned approximately $85,000 in the 17 months since the order was made, and that his yearly income was only about $60,000 per year "at best and probably less than this". [13] Mr. Bodnar says that at the time he agreed to pay the $120,000 per year figure in the consent order, he had not yet received the 2009 financial statements for the home building business, which were prepared in October of that year. He was optimistic that he could earn income in that range (that is, $120,000) but subsequent events have proven him wrong. [14] His counsel provided a helpful chart as part of submissions setting out Mr. Bodnar's share of pre-tax income of the two companies and his tax return income, where it was available, for the years 2006 to 2011. [15] For 2008 to 2011, years for which tax return income is available, counsel provided a total figure, once the tax return income and his share of pre-tax profits or losses of the company (which can be considered as income in appropriate circumstances pursuant to s. 18 of the Guidelines) were added. Counsel explained that Mr. Bodnar's current proposed income for child support purposes has been arrived at by adding the total for 2011 to the small amount of cash jobs that Mr. Bodnar is currently doing. [16] Ms. Bodnar takes vigorous exception to all of these representations. [17] Firstly, she points to the unlikelihood of a payor parent agreeing to a higher income for the purposes of child support than he was actually earning. In addition, she questions whether a material change in circumstances, which is required in order for me to vary the order, can be shown when Mr. Bodnar claims that he is now earning approximately what his so-called true income was at the time the order was made. [18] Her position is that he made substantially more than $120,000 at the time of the consent order but that was a figure she was willing to accept through the negotiation process, in order to achieve a consent order. [19] Ms. Bodnar also submits that Mr. Bodnar's current representations about his income cannot be relied on by the Court in this application. [20] In his examination for discovery before the consent order was arrived at, admissions were obtained from him that he had carried out building transactions on a cash basis, that he carried large amounts of cash and that it was his preferred method of paying for things, for example, his rent. [21] There were also 47 unanswered requests for further disclosure arising from the discovery which were not fulfilled but were no longer an issue once the consent order was arrived at. [22] In terms of available resources to pay child support and Mr. Bodnar's actual lifestyle, Ms. Bodnar notes that she paid him $31,500 to purchase his interest in their former home -- money that, if he had shepherded it properly, could have retired his arrears. [23] She also points to his ownership of non-essential items, such as a recreational vehicle and a ski boat. She suggests that the boat, which she and Mr. Bodnar previously owned together during their relationship, is worth considerably more than the $5,000 that he lists as its value. The recreation vehicle is available for rental and has been advertised for that purpose, but no income from such a source has been declared. It is said to be worth $20,000 but subject to a loan for a higher amount, which raises suspicions about the accuracy of the disclosure relating to its value, given the usual unwillingness of lenders to advance a sum greater than the value of the item purchased. [24] Mr. Bodnar and the woman with whom he is now in a relationship have also had various holidays together during the same time that he has not been paying sufficient child support, including to Las Vegas and Mexico. [25] Ms. Bodnar also alleges that Mr. Bodnar was involved in renovating the home that he occupied with this woman. It was subsequently sold. [26] As to his supposed business difficulties, Ms. Bodnar has included in her material advertisements that he placed for a driver for the delivery truck in March of 2011 and one for framers in October. [27] She submits that he is a highly qualified construction business owner/operator and that, even if he were to work at a considerably lower level of responsibility as a construction manager, there are positions currently available that by conservative estimate would earn income of almost $80,000 per year. [28] Ms. Bodnar's overall submission is that this failure to pay child support and the current application can be explained completely by Mr. Bodnar's estrangement from his children, with whom he currently does not have contact. [29] In his reply material, Mr. Bodnar sought to rebut many of the inferences that might otherwise be drawn from the conduct Ms. Bodnar has described. [30] He admits that he has done and continues to do some cash work but says that these are but a small part of his overall business. He has taken these amounts into account when he is describing his current income to which his child support obligations should be adjusted. [31] The home in which he lives belongs to his current romantic partner, whom he is careful to distinguish from being a common law spouse, and he has made no contribution to it. [32] Most of the proceeds of the sale of his interest in the matrimonial home went for legal fees and part of the small amount that remained available to him was put towards child support. [33] The recreational vehicle was bought with borrowed money in hopes of affording him a means of affordable holidays. He has abandoned his unsuccessful attempts to rent it out to defray the costs. Other than some camping trips in British Columbia, his other vacations since the order has been in place were paid for entirely by his romantic partner. [34] The ads for a driver for his truck pre-dated his sale of it with his partner and the ad for framing workers was for a job that he and his partner bid on, but never got. [35] He denies in particular that he is motivated to reduce his child support by his estrangement from his children, which he said arose independently of any support issues. 3. Discussion [36] The law that applies to this application is not in dispute. An order for child support cannot be varied unless there has been a material change in circumstances. This is a significant and long-lasting change which, had it been known at the time of the order, would have resulted in a different order. If it was foreseeable at the time of the order, it does not meet that test for materiality. A classic reference is Willick v. Willick, [1994] 3 S.C.R. 670. The onus is on Mr. Bodnar to prove such a change on a balance of probabilities. [37] Arrears of child support should not be cancelled or reduced whether under the Family Relations Act, R.S.B.C. 1996, c. 128 or the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) unless it would be grossly unfair not to do so. An application of that principle is found in the case of Luney v. Luney, 2007 BCCA 567. [38] The first step in resolving this application is for me to characterize what went on with respect to the determination of Mr. Bodnar's income in the consent order. [39] I find it unlikely that he would have agreed to have his income set at $120,000 solely on the basis solely of optimistic hopes of it increasing to that amount, particularly as he was represented throughout the negotiation process by experienced counsel. Both of his companies had been in a loss position in terms of his share of pre-tax income for the 2009 year, so it is not clear why he would be misled by the unavailability of the 2010 financial statements into such false hope and more primarily, that he would not know how his relatively small business was doing on a month-to-month basis by July of 2010, when the order was arrived at. [40] In reply submissions, his counsel suggested that there were retained earnings in the company that could have been drawn on in arriving at this belief in the income that was consented to but Mr. Bodnar himself has not deposed to this. [41] In my view, it runs counter to common sense that Mr. Bodnar would stake himself to a figure that he was not actually earning at that point, with all the consequences that would flow from his failure to achieve it. His current situation is the most pressing example of such consequences. [42] I prefer and accept Ms. Bodnar's characterization of the $120,000 figure as the highest amount that her counsel was able to persuade Mr. Bodnar to accept for the purposes of a consent order and that it represented, at the very least, his understanding of his income at that time. In other words, I am satisfied that at the time of the consent order, Mr. Bodnar's income was at least what he agreed to in it. [43] It is certainly possible that Mr. Bodnar's income has decreased since then, as he claims. There is some circumstantial support for his version of events in the 2011 financial statements, which show an increase in the revenue of the framing business while the house building company remains at an unprofitable level. [44] The problem I have is that there are simply too many danger signs for me to accept, without objective confirmation, of his current representations about his income. The most disturbing one is the cash transactions. I really have no reliable means of assessing the extent of his off-the-books work and, when coupled with the admissions about the extent of that work as of July 2010 in examination for discovery, I am left with a real concern that it is more extensive than he has deposed to. [45] I also that find his decision to acquire the recreational vehicle with what appears to be an unsustainable debt load and to maintain a ski boat suggests that he either has greater resources with which to sustain them than he has disclosed, or that he is making selfish choices with scarce financial resources that, pursuant to the order, belong in part to his children. [46] It also seemed curious to me that he made no contribution to these various vacations his partner allegedly takes him on, even though he is hardly poverty-stricken even at the income he has claimed, and that he took no share in the improvement of a home that she apparently renovated, despite its registration in the name of a realtor who is a friend of his and particularly given that he works in the construction business. [47] I also know no more about the nature of the retained earnings in the company than counsel's brief reference to them during submissions, including the form they currently take and whether this is one of those cases in which it is appropriate that they be drawn on to augment the shortfall in child support. [48] Finally, his dismal response to the numerous disclosure requests from the discovery suggests that I should be cautious to a further extent in relying on the completeness of his disclosure. [49] It is not necessary to ascribe a motive to Mr. Bodnar in failing to make his required payments under the order, but his decision to cut off of those payments completely (before some sporadic ones began) rather than negotiating informally the payment of new Guidelines support based on his supposedly reduced income, is a strong factor suggesting that the nature of his relationship with his children was at least partly a motivating factor. In any event, it detracts from the credibility of the assertion that the change was based on a reduction in income. [50] It is very unfortunate that what may well be an underlying legitimate change to some extent in Mr. Bodnar's income has been so obscured by this fog of unanswered questions. Even if I were persuaded that the change is legitimate however, I would be at a loss on the current evidence as to what new figure to substitute. The $60,000 per year that has been proposed seems essentially to have been plucked out of the air, with Mr. Bodnar himself indicating that it is approximate and could be less. [51] It is always open to him at some time in the future to document his business dealings, particularly the actual extent of his cash business, in a more reliable and transparent manner and thereby to address the strong indications that he is living in a manner that belies his represented financial circumstances, but on the present evidence I am not satisfied that he has met his onus. 4. Conclusion [52] I dismiss Mr. Bodnar's application to vary the 2010 order. [53] It follows from that there will be no reduction or cancellation of his arrears. [54] Ms. Bodnar will be entitled to her costs of this application. The Honourable Mr. Justice T.A. Schultes